Should Indian Government Subsidize Higher Education or Not

higher education subsidy

According to a 2014 report by the US-India Policy Institute in Washington, a mere 10% of students have access to higher education in India. The corresponding figures are 22% in China and 28% in America.

Higher education is subsidized by the state in all countries of the world. Subsidies in India are not at all high as compared to the other countries. In Canada, France and Hungary, higher education is subsidized by 80%, while in Australia, Ireland, Spain and Mexico, it is more than 70%.

In the United States, a model of sorts, state schools remain highly subsidized and have higher enrollment than private schools.

It is being touted that India needs subsidized higher education so that more students can have access to higher education. The question however is, how a country with limited resources and great diversity can subsidize education in a justifiable manner, so that the economically weaker as well as affluent students both can benefit.

The debate for using public money to fund higher education is linked to the reasons of education being a public good, leading to the creation of a developed and healthy society. The obvious benefits are decreasing poverty and crime, adoption of new technologies and progress in all spheres of life. While most of the gains from higher education accrue to the person receiving it (in terms of increased incomes), the whole of society benefits at large.

Public provisioning of higher education can also serve as an important tool to provide equality of opportunity irrespective of social and economic status.

In a society where higher education is free, students born in both poor and rich families have an equal chance of increasing their future earnings, which would not have been the case if access to higher education had been dependent on parental incomes or wealth. In the present scenario, higher education is no longer elitist and certainly more democratized because of subsidies.

Read: Only the wealthy are making in India, not the underprivileged

National values also stand to gain. All in all, there are substantial social benefits to move that higher education should be publicly financed or subsidized.

If a resource crunch is cited as a reason to curb subsidies then it can be argued that funding in other non-essential areas can be reduced to fund higher education.

Given the high cost involved in providing higher education, limited or no public subsidies would mean that students have to pay for most of the costs involved, often by taking loans.

As many students in the US are discovering today, it can take a long time for students to pay back the debt they are forced to take to fund their education.

higher education loan subsidiesThe growing student loan burden can have adverse effects beyond the stress it causes to students and their families. Young graduates are often forced to cut down on their consumption and housing expenditure in order to pay for student loans. It also impacts their employment choices.

Commercialization of higher education can actually bring down the social contribution potential of education itself and make it more focused on private gains, which are also not uniform for all.

Those who debate for reduction of subsidies or even doing away with them totally, say that in fact, subsidies in higher education can be counter productive and even regressive.

They argue that the rich stood to gain more than the poor from public subsidies due to various factors. Despite the subsidies, availing of education entails private costs which the rich find easier to pay. These could include cost of transport to the university and other living expenses.

A poor student might not gain from higher education as much as his/her rich counterpart in the long run because the latter’s family might use its clout to find a better job.

Our government is facing a huge resource crunch and other basic, more urgent needs, like primary education and health care need to be taken care of first. The fact remains that the demand for heavily subsidized higher education is growing disproportionately to our ability to provide it.

The argument is that given the lack of resources and private benefits that accrue from investments in higher education, India should stop using scarce tax resources on funding higher education.

higher education india
Image credits (india.gov.in)

Instead various measures like differential fee structures based on income levels and levying a graduate tax on employers hiring graduates should be employed.

Higher education is not price elastic so increase in fees would not lead to a decrease in enrollments. In fact, an expensive school is often more desirable than a less expensive one.

Students are more likely to attend a school that has more amenities like new buildings and recreational facilities – which the institution is able to provide.

In fact, this would also lead to an increase in quality of education by making students more responsible and serious about their studies.

Reducing government involvement would make institutions more autonomous and better able to make decisions concerning their own viability.

Many universities are now experimenting with cost recovery measures, generating resources from students fees and other sources.

In the current wave of market reforms it is both desirable and feasible to reduce government subsidies. However, they must not be done away with in entirety.

Alternatives to subsidies can be considered in the form of grants to students, grants to institutions, voucher schemes, subsidies in cost of living and student loan programs.

Most Ivy league schools ‘hustle’ for endowments and grants to help meritorious students meet the tuition fee requirements. The same can be done in India.

The higher education sector in India is crying out for attention on all fronts: quality, quantity and access. The education system’s contribution to the nation-building process is crucially dependent on how it is to be financed in the days to come.

Given the scale of India’s higher education sector, it is required that the ongoing debates and experiences of various institutes of higher education functioning are critically studies. A flawed debate on nationalism only detracts attention from the serious questions on higher education facing us today.

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